Santander, a major Spanish bank, had appealed a case against Mercado Bitcoin, but was rejected by the State of Sao Paulo’s Court of Justice. Mercado Bitcoin, which is based in Brazil, is a popular crypto exchange in South America, allowing for the trading of several cryptocurrencies.
In 2018, Santander Bank closed Mercado Bitcoin’s bank account with claims that the bank was concerned over the source of the money as well as on the nature of activities of the crypto exchange firm.
As noted, several financial institutions have the notion that the crypto industry is unstable and volatile in nature. This concern is followed by the ideology that such business transactions are dangerous, considering that, they largely remain unregulated.
A lawsuit followed, which the Spanish bank lost in court, raising mixed reactions. The bank filed for an appeal and yet again, the victory lay with the Brazilian crypto exchange. The Brazilian court argued that banks should have a justified reason to close accounts. The ruling judge argued that despite the risks arising from the custody and trading of the so-called virtual currency, the Central Bank of Brazil has not prohibited the trading of digital coins.
In the ruling, the court said the bank violated resolution No. 2,025/93 of Banco Central do Brasil, which states that a financial institution should clearly define a reason for taking such measures (freezing and closing an account). In addition, Bacen’s circular No. 3,788/16 adds that the notification of an intention to terminate a contract should contain express reference to the exact motives.
In the previous ruling, the court ordered that the seized and locked funds from the exchange be refunded. In addition, the bank must pay a monthly fine which is equal to 1% interest for the funds that were locked. The locked funds amounted to more than 1 million Brazilian reals ($350,000) accompanied by a monthly fine of more than 200,000 reals ($51,000).
The hefty fine pushed the bank into filing for the appeal. The court’s decision reconfirmed the previous ruling and rejected the appeal by the bank. Santander Bank will return the funds and pay the fine as initially ruled.
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